Moody's Investors Service today cut its rating on ArvinMeritor Inc., saying profits of the car and truck parts maker will likely remain under pressure despite recent progress in cutting debt.
Like other U.S. parts makers, ArvinMeritor has been pressured by significant production cuts at several of its largest light vehicle customers. It has been supported by strength in its heavy truck parts business.
While leverage has been reduced as a result of a 2006 tender offer and asset dispositions, it remains high, Moody's said in a statement.
ArvinMeritor has taken steps to strengthen its capital structure, however, and has minimal near-term debt maturities to meet, as well as cash available under a committed revolving credit line, the rating agency said.
Moody's cut ArvinMeritor's corporate family rating by one notch to "Ba3," three steps below investment grade, from "Ba2." The outlook is stable, meaning another rating change is not expected over the next 12 to 18 months.
ArvinMeritor is ninth on the Automotive News
ranking of top suppliers in 2005 to North American vehicle manufacturers with $4.5 billion in parts sales.
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